Licensed moneylenders are regulated by the government and must comply with a variety of rules and regulations. They offer a wide range of loan products and are a viable alternative to traditional bank loans.
They must clearly explain their product and loan terms to borrowers in language that they understand. They must also provide a copy of the contract. Their total charges — interest rates, upfront administrative fees and late fees — cannot exceed the principal amount of the loan.
They offer a variety of loan products
Licensed moneylenders are able to provide a variety of loan products, including secured and unsecured loans. Secured loans require collateral such as a car or property to be pledged, while unsecured loans do not. Some lenders also offer debt consolidation loans, which can reduce the number of monthly repayments a borrower has to make.
It is important to understand the terms of your loan contract before applying. A good licensed moneylender will explain all the fees and charges in clear terms. If you are unsure of anything, do not hesitate to ask questions.
It is also crucial to choose a licensed moneylender that complies with all local and national rules. Otherwise, they may have hidden charges that could be costly in the long run. You can check a licensed moneylender’s credentials by looking at their official license posted in their storefront or on their website. They are also required to keep your information confidential. This is to protect your rights and dignity as a borrower.
They are regulated
A licensed money lender will only lend you a loan that you can afford to repay. This is because they are required to abide by the contract’s terms and conditions, which must be made clear to you in a way that you can understand. They will also be able to answer your questions and clarify any confusion you may have.
In addition, legal lenders are prohibited from charging exorbitant fees and interest rates. This ensures that borrowers do not fall prey to predatory tactics. Unlicensed money lenders, on the other hand, may charge high interest rates and other fees that can make it difficult to repay a loan.
Additionally, no legal money lender can spray O$P$ on your door or neighbours’ doors or threaten you with violence – this is what makes them different from loan sharks. However, debt collectors may still use scare tactics to try to retrieve your loan. This is against the law and is a breach of the Moneylenders Act.
They are a viable alternative to traditional bank loans
Licensed moneylenders are more accommodating than traditional banks in their lending criteria. They are more willing to work with borrowers with bad credit scores and other financial issues. They also offer a variety of loan products to cater to different needs. Moreover, they are not allowed to charge more than the legal maximum of 4% monthly interest on their consumer loans. This means that borrowers can compare rates and charges from different companies before they take out a loan.
Moreover, they are not permitted to make false or misleading statements in advertisements. They must clearly state all fees and interest rate upfront. They are also not allowed to impose a late payment fee or upfront service fee that exceeds 10% of the loan amount. They are also prohibited from writing “O$P$” or other derogatory remarks on a borrower’s property.
Moreover, they must provide a clear and concise written contract that details the loan terms, repayment periods, and other fees. Borrowers must carefully read and understand all clauses of the loan agreement before signing. If they are unable to comprehend the terms, it is best not to accept the loan.
They are an essential part of the financial sector
Licensed moneylenders provide an important service to people who require fast and flexible loan options. They also operate under strict regulations to protect their customers and maintain the integrity of the financial sector. They must disclose all fees and interest rates before a borrower signs a contract. They can also legally inform friends and family members about debts. However, they cannot threaten to damage a borrower’s property.
Unlike unlicensed lenders, which charge exorbitant rates, licensed moneylenders are required to follow the Ministry of Law’s regulations. The maximum interest rate a licensed moneylender can charge is 4% per month. This means that if you take a loan from a licensed moneylender, you can be sure that the terms of the contract will be fair and reasonable.
Before borrowing from a licensed moneylender, it is important to consider whether you are able to fulfil the contractual terms based on stipulated conditions. You should only take a loan that you can repay within the stipulated repayment period.
